Wall Street Breakfast: Equities Sell Off - What Will April Bring?

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Includes: AGN, AMZN, AZSEY, BHI, BP, DIS, EMR, GOOG, GOOGL, H, HAL, HLT, JNS, JPM, MAR, PEUGF, PFE, QQQ, SIEGY, SPY, TSLA, VRX, ZTCOY
by: Wall Street Breakfast
Wall Street Breakfast
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.

March's stock market spring back is threatening to turn into a pullback. While April is typically one of the best months of the year, equities are remaining under pressure as oil slips to a one-month low, sentiment sours ahead of the Fed's minutes tomorrow, and traders expect a poor beginning to Q2 earnings season next week. The attitude against riskier assets has also sunk the dollar to a fresh 17-month low against the yen. U.S. futures: Dow -0.8%. S&P -0.9%. Nasdaq -0.7%.

Economy

Chicago Fed President Charles Evans has repeated his call for just two U.S. interest-rate hikes this year, stating that the risks to his forecast for economic growth are weighted to the downside. "A very shallow funds rate path, such as the one envisioned by the median FOMC participant in March, is the most appropriate." Evans, who does not vote on monetary policy this year, expects the U.S. economy to expand by 2%-2.5% in 2016.

The Reserve Bank of India cut its repo rate by 25 basis points to 6.5% overnight, making a widely expected reduction to bring the figure to its lowest in more than five years. But in a surprise move, the RBI also raised the reverse repo by 25 basis points to 6.0%, while taking measures to ensure more availability of cash in the banking system. Heading Down Under: Australia's central bank left interest rates at a record low 2.0%, where they have been for nearly a year, citing evidence of continued growth at home despite an unhelpful rise in the local dollar.

In a speech at Frankfurt's Goethe University, IMF Managing Director Christine Lagarde turned up the volume for stronger action by the world's economies to boost growth, warning that downside risks were increasing without decisive action. "Let me be clear: we are on alert, not alarm. There has been a loss of growth momentum." She also prescribed specific moves, including for the U.S. to raise its minimum wage, for Europe to improve job training and for emerging economies to cut fuel subsidies and boost social spending.

Factory orders in Germany unexpectedly fell to a six-month low in February because of lower foreign demand and a below-average number of bulk purchases. Orders, adjusted for seasonal swings and inflation, dropped 1.2% from the prior month, when they rose a revised 0.5%, according to data from the Economy Ministry in Berlin. Bundesbank warned last month that the nation's growth momentum could slow in Q2 as weakening exports prompt companies to curb output and hiring. Other news from the eurozone: The region's composite PMI for March was 53.1 vs. a flash figure of 53.7.

The 'Panama Papers' have been causing a stir across the globe for the last 36 hours, with many demanding resignations ranging from Iceland's Prime Minister Sigmundur Gunnlaugsson to Ukrainian President Petro Poroshenko. For more than a year, Frederik Obermaier, investigative journalist at Suddeutsche Zeitung has being piling through the 11.5M documents leaked from Panama-based law firm Mossack Fonseca. Speaking on the phone from Munich, he said in the coming days, names of corporations rather than individuals will start to appear.

Brazil's lower house committee has now heard final arguments from representatives of the government and opposition regarding President Rousseff's impeachment, and could make its recommendation to the full house next week. If 342 of 513 lawmakers see grounds for her removal, the case goes to the Senate. Rousseff's legal team on Monday urged Brazil's Congress to reject the proceedings, arguing that the case lacks legal basis and ought to be thrown out.

The impeachment spirit is also hitting South Africa. President Jacob Zuma will face another bid for his ouster today when parties debate a call for him to be removed from office following his "constitutional breach" of failing to repay some of the $16M of public money spent on his private residence. The scandal is arguably the biggest yet to hit Zuma, who has fended off accusations of corruption, influence peddling and even rape since before he took office in 2009.

Stocks

Succession planning at the world's largest media company has fallen into disarray after Tom Staggs, Walt Disney's (NYSE:DIS) chief operating officer and the heir apparent to CEO Robert Iger, unexpectedly said he would step down. Sources told CNBC that Staggs decided on the move because he didn't receive assurances from the board that he would succeed Iger. Although he'll stay on as a special advisor, Disney will evaluate a "robust slate of candidates" to select a new COO.

E-readers may not be the most exciting space in tech these days, but a new Kindle is just around the corner. "Heads up readers – all-new, top of the line Kindle almost ready. 8th generation. Details next week," Amazon's (NASDAQ:AMZN) Jeff Bezos said in a tweet. The Kindle is currently on its seventh generation, with three variations: The Kindle, the Kindle Paperwhite and the Kindle Voyage, with the latter being the most advanced and expensive version.

The European Union is "advancing" probes into whether Google parent Alphabet (GOOG, GOOGL) is abusing its dominance with its Adsense ad service and Android mobile-operating system, the bloc's competition chief Margrethe Vestager said in an interview. The comments suggest the regulator could initiate additional accusations against the search gorilla. Vestager filed separate formal charges against Google last April for allegedly skewing its search results to favor its own shopping service.

Just weeks after the U.S. government imposed tough export sanctions on the Chinese telecom equipment maker, ZTE Corp. (OTCPK:ZTCOY) has executed a "routine management reshuffle." Current CTO Zhao Xianming was named as the company's new President, while other top brass were dropped from the executive vice president list. The company shakes up management every three years, but the number of high-level changes were likely related to the U.S. export restrictions.

A line of luxury hotels linked to businessman and Republican presidential contender Donald Trump is being investigating for a possible credit card breach, according to Krebs on Security, the second such breach in less than a year. The report comes after a string of cyber attacks on the hotel industry. Breaches have hit properties from Hilton (NYSE:HLT), Hyatt (NYSE:H) and Starwood (HOT) in the last two years.

The Justice Department has filed a civil suit (based on the Hart-Scott-Rodino Antitrust Improvements Act of 1976) against ValueAct Capital Management for failing to disclose more than $2.5B of stock purchases in Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) after the oil companies announced their $35B planned merger in 2014. The lawsuit is another blow to the activist investor, which since August has had to stomach huge paper losses on its investment Valeant Pharmaceuticals (NYSE:VRX).

Emerson Electric is in early-stage talks with Siemens (OTCPK:SIEGY) about selling its network power business, which it hopes to offload for as much as $4B, Reuters reports. Emerson is additionally talking with P-E firms including Platinum Equity, and other companies have also expressed interest. A potential deal would allow Emerson (NYSE:EMR) to focus on its core industrial automation businesses.

A federal judge in New Orleans has granted final approval to the $20B settlement from the 2010 BP oil spill in the Gulf of Mexico, resolving years of litigation over the incident. The deal, first announced in July, includes $5.5B in civil Clean Water Act penalties and billions more to cover environmental damage and other claims by five Gulf states and their local governments. The money will be paid over a 16-year period.

Shares in Allergan plunged 22% in extended trading after the U.S. Treasury announced new measures aimed at curbing tax-avoiding corporate inversions. The changes are thought to throw the Dublin-based Allergan's (NYSE:AGN) $160B merger with U.S. rival Pfizer (NYSE:PFE) into doubt. Following the news, the firms issued a joint statement: "We are conducting a review of the actions announced today. Prior to the review, we won't speculate on any potential impact."

Valeant Pharmaceuticals has terminated its sales force for female libido pill Addyi, after the drug failed to gain traction in the first six months on the market. The company will let go of 140 contract workers, plus another 140 employees across its dermatology, gastrointestinal and women's health divisions. Valeant (VRX) acquired Addyi for $1B from Sprout Pharmaceuticals last fall.

The "Bond King" is back in the news. Pimco (OTCQX:AZSEY) is claiming founder Bill Gross's abusive conduct and attempts to sabotage colleagues he called disloyal gave it "good cause" to oust him, and not pay any of the more than $200M of damages he now seeks. Pimco also said that he acknowledged in a meeting the day before walking out that he would forfeit any potential bonus if he quit that month. Gross abruptly left the asset manager in mid-2014 for rival Janus Capital (NYSE:JNS).

Banks are paying more attention to large cash transfers that could be a sign of money laundering or other shady activity. JPMorgan Chase (NYSE:JPM) has now capped ATM withdrawals at $1,000 per card daily for noncustomers across its 18K locations nationwide. However, the move doesn't affect the bank's own customers, whose maximum daily withdrawals are set depending on the client's account type.

Tesla -3.1% premarket after disclosing fewer first-quarter deliveries than expected. The luxury EV maker delivered 14,820 vehicles in Q1 to miss the forecast of 16K, plagued by a shortage of key parts for the tech-heavy Model X. Despite the light quarter, Tesla (NASDAQ:TSLA) still expects to deliver 80K to 90K vehicles during the year. Will the company avoid the same mistakes for the Model 3?

Peugeot Citroen plans to re-enter the U.S. market after a more than two decade absence as part of an ambitious global push to move away from its overreliance on Europe. The French automaker, whose turnaround under chief executive Carlos Tavares brought it back from the brink of disaster, has unveiled a six-year plan to boost profits and margins: cost-cutting, fesh technology, new markets, self-driving and electric cars, and investments in ride-sharing startups. Peugeot (OTCPK:PEUGF) shares -6.2% in Paris.

Today's Markets

In Asia, Japan -2.2% to 15733. Hong Kong -1.6% to 20177. China +1.5% to 3053. India -2% to 24883.
In Europe, at midday, London -1.3%. Paris -2.1%. Frankfurt -2.2%.
Futures at 6:20, Dow -0.8%. S&P -0.9%. Nasdaq -0.7%. Crude -0.7% to $35.46. Gold +1.1% to $1233.10.
Ten-year Treasury Yield -5 bps to 1.72%

Today's Economic Calendar

1:00 Fed's Evans: Monetary Policy
8:30 Gallup US ECI
8:30 International Trade
8:55 Redbook Chain Store Sales
9:45 PMI Services Index
10:00 Job Openings and Labor Turnover Survey
10:00 ISM Non-Manufacturing Index

Companies reporting earnings today